Five things you need to know before opting travel now, pay later scheme

Sometimes we save money to take a vacation and blow off steam, only to utilise that money for some other pressing commitment. In order to accommodate commoners’ fantasy vacations, a new plan has been devised. The ‘Travel Now, Pay Later ’ scheme is similar to taking a travel loan.

This article talks about the top 5 things you need to know before you decide to go for it.

What is the scheme about?

The scheme allows you to travel on credit, with minimum or no advance before you start your trip. After your trip, based on the terms of loan, you will be required to pay back.

What is the eligibility criteria for the TNPL scheme?

Just like loan eligibility, banks and fintech institutions have framed a criteria for eligibility that takes into account your current earnings, age, credit score, job type, industry etc. But, again, there are a wide variety of sources to choose from, so an option well suited for you can be found.

Who offers the scheme?

Banks, fintech institutions, travel companies, travel aggregators arrange for the TNPL scheme. The loans start from a repayment period of one month to six months, extending up to 18 months as well, for large amount of loan.

What’s the interest and repayment like?

While some offer the credit and start with repayment only after the trip, some companies, banks and agencies require a certain percentage of down payment before embarking on the trip. With regard to interest, there are a couple of terms. Loans with a minimum repayment period attract no interest or 1-2.5% of interest, depending on the lending institution. Larger the loan amount and larger the repayment period, interest will be higher. No cost EMI is an option, provided the credit score is higher and the amount of loan and repayment period are in tandem. Any late payments or default in payments would lead to penalty and have a significant impact on your credit score.

Amount of loan

The loan can be availed for domestic and international travel, with the range of eligible loan amount being INR 14,000-INR 15,000 and INR 65,000-INR 75,000 to international trips, extending upto INR 1.5L.

Expenses included

The TNPL scheme covers travel, flight, accomodation, sightseeing and related expenses, however, subject to the terms put forward by the vendor.

Is it advisable?

If you are a person who pays their bills promptly, without any backlogs, then this scheme can be considered by you. However, if you take the liberty of paying dues late and enjoying your trip first, there’s a downside to it. The interest and EMI itself can consume your income in the coming months, depending on the repayment period and loan amount.

Not to mention the adverse impact it has on default. This would in turn lead to decreased financial outlay for the coming year, which means reduced savings for the next vacation, thereby resulting in availing the loan for the succeeding vacations as well. If not handled properly, it could lead to a cycle of borrowing and repaying. Hence, proper counsel has to be considered before making the decision.

It is always better to pay upfront and enjoy the vacation, than to return from a memorable vacation and meet a huge bill waiting for you.

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